PetroPeru prepares for second debut

Peru's new government is vowing to restore the wellhead-to-pump mandate of state-owned PetroPeru three decades after its main assets were privatized.

In his first initiative since taking office late last week, energy and mines minister Ivan Merino met with PetroPeru's unions and promised to move aggressively to expand the firm.

Far-left president Pedro Castillo singled out PetroPeru in his 28 July inaugural address, saying it would be a fully integrated company competing with the private sector, but without indicating how his government would pay for it. The company was founded by the 1960s left-wing military government.

"We are very pleased the minister met with us. It was a first for the company and a good start, with the government listening to what PetroPeru's workers want for the company," Oscar Vera, labor representative on the company's board of directors, told Argus.

"PetroPeru is a large company with decades of experience. We were removed from some parts of the business, but that does not mean we cannot operate them."

PetroPeru lost its oil fields, retail business and most transportation units in a 1990s sell-off under former president Alberto Fujimori, father of Keiko Fujimori who was defeated by Castillo in a fiercely contested 6 June run-off election.

Downstream, PetroPeru sold its 117,000 b/d La Pampilla refinery to Spain's Repsol in 1996 but retained 65,000 b/d Talara which is scheduled to be upgraded to 95,000 b/d early next year. PetroPeru also owns three smaller refineries.

In recent years, PetroPeru has been slowly expanding into upstream areas relinquished by the private sector. Under current chief executive Eduardo Guevara, the company plans to restart northern block 192 this year. Canada's Frontera relinquished the 10,000 b/d block in February. In June, PetroPeru signed up another Canadian firm, Altamesa Energy, to manage the block, which has been shut in early 2020 with the onset of the Covid-19 pandemic.

PetroPeru also holds exploration block 64 and is eyeing block 8, which Argentina's Pluspetrol operated until last year. The latter had been producing 8,000 b/d before it was also shut in early last year.

PetroPeru's main midstream asset — the 100,000 b/d northern crude pipeline that runs 1,000km from the jungle to the coast — has been plagued by illicit taps, ruptures and protests for years. It requires at least $250mn to modernize, according to industry estimates.

By Lucien Chauvin